The European Commission has published its first review of the Foreign Subsidies Regulation, proposing targeted adjustments to reduce the compliance burden while maintaining robust enforcement in strategically sensitive cases.
Key Takeaway: only targeted adjustments because the FSR is seen as fit for purpose
- On 14 July 2026, the European Commission (“Commission”) published its first formal review report of the Foreign Subsidies Regulation (“FSR”).[1] It concluded that the FSR is “fit for purpose” and contributes to the EU’s goal of addressing distortive foreign subsidies.
- At the same time, the review notes the burden on businesses in the collection and reporting of data on foreign financial contributions and the length and complexity of procedures. The Commission proposes only targeted adjustments to the FSR procedural framework in 2027, streamlining procedures for low-risk cases while preserving (and potentially intensifying) scrutiny for strategically sensitive transactions involving state-linked financing structures. The proposals signal both an easing of administrative burden and a potential sharpening of enforcement focus. Understanding which category a transaction or activity falls into will be critical. Stakeholders will have the chance to comment on the planned changes.
The Commission’s proposed adjustments for transactions
- Moderate Increase of Notification Thresholds. The Commission is exploring a moderate increase of the current EUR 500 million revenue threshold for transactions. While no specific figures are disclosed, the Commission can unilaterally increase the threshold to EUR 600 million, and its report indicates that if this was the threshold, a reduction of 16% in cases notified to the Commission would have occurred.
- Simplified Procedure for Low-Risk Transactions (including PE). The Commission proposes to introduce a simplified notification process for non-issue transactions, likely similar to a Short Form CO in merger control with reduced information requests and a moderate increase to the reporting threshold of state-linked subsidies.
- Maintained Importance of Ex Officio Powers. While easing procedural requirements for transactions, the Commission reaffirms its broad discretion to initiate ex officio investigations to address potentially distortive foreign subsidies in any economic activity and to exercise call-in powers for below-threshold transactions.
The FSR in numbers
- As of 31 May 2026, the Commission has received 272 formal notifications under the concentration notification procedure (99% were closed in Phase I; three cases went to Phase II, where the Commission cleared two conditionally and one is still ongoing; no transactions were called in). Two of the three Phase II cases involved Chinese buyers.
* * *
[1] See Report from the Commission to the European Parliament and the Council on the implementation and enforcement of Regulation (EU) 2022/2560 of 14 December 2022 on foreign subsidies distorting the internal market, in accordance with Article 52(2) thereof, available here: https://ec.europa.eu/commission/presscorner/detail/en/ip_26_1606.
